Pokhran tremors shake capital markets

The uncertainty about the kind of
sanctions to be imposed on India has affected
the earnings of companies.

Thus, the Skindia GDR index
lost 4.28 per cent, coming down to 907.55
points on May 12, and a further 7.33 per cent
to 841.03 points
on May 13, on account of
two more tests. In comparison, the BSE
Sensex lost 77.07 points and 162.37 points.

However, the indices
recovered by the end of the week.

During the week, 65 GDRs and the underlying
shares lost 4.10
per cent and 4.76 per cent
respectively. Twenty of the 65 (30.77 per
cent) GDRs were quoting at their
52-week low. Among them were
pivotals like Indian Hotels at $ 13.75 (May 13),
Mahindra and Mahindra at $ 6.40 (May 14) and VSNL at
$ 11.50 (May 13).

GDRs from telecom, aluminium and autos
were among the major losers, losing 11.61 per cent, 11.45 per
cent and 9.81 per cent respectively.

The textile industry was
the only gainer, appreciating 2.40
per cent. Aluminium and
cement sectors were the mojor losers in the
underlying shares,
falling 8.63 per cent and 8.08 per cent.

With a rise of 3.16
per cent, the steel sector was the only gainer
in the shares.

Although there was a rise in the net profits of
Hindalco
and Indo-Gulf, the overall performance of the Birla group
companies have not been very encouraging in fiscal
1997-98. Indo-Gulf was the star performer, with its net profit
rising 30.56 per cent, to Rs 1.41 billion, on
announcement of
results on May 4. The GDR was unchanged at $ 1.35,
whereas its share appreciated by 9.88 per cent to Rs 41.15.

Hindalco's net profit
rose 26.85 per cent to Rs 4.96 billion. The results on May 8
failed to enthuse the markets, and its
GDR and share depreciated
1.23 per cent to $ 20 and 6.84 per cent to Rs 739.
During the year, its GDR lost 39.34 per cent while its share
declined 27.05 per cent.

Indian Rayon's net profit was marginally down by 1.05 per cent
at Rs 2.12 billion. On announcement of the results on May 6,
its GDR
and share fell 1.71 per cent to $ 5.75, and 2.30 per cent
to Rs 229.80. During the year, its GDR and share have lost 53.85
per cent and 40.30 per cent respectively.

Grasim performed the
worst with its net profit falling 16 per cent to Rs 2.31 billion.
On the back of higher dividends of 67.50 per cent, its
GDR rose by 2.33 per cent to $ 11; its share
was up by 2.92 per cent to Rs 353 on May 5, the day the results were
announced. The GDR and share fell 28.89 per
cent and 9.01 per cent during the year.